Each day I receive calls and emails about various real estate, appraisal and financial topics. Occasionally, I select some of these questions and share them. Here are a few of them.

Broker:What are the rules for well and septic setbacks for FHA?

Jack: For FHA & USDA, private wells MUST be 50 feet from the septic tank and 100 feet (75 feet in New Hampshire) from the drainage field (leach field). In addition, the well must be 10 feet from property lines. If it does not meet these setback, it does NOT meet FHA standards. If you try to finance a property that lacks these setbacks with either FHA or USDA, the appraiser MUST (no subjectivity involved) report this to FHA. At that point, the loan is in serious jeopardy. A few possible solutions are; 1) change the loan program to conventional 2) Move the well or septic 3) connect to public water and/or sewer or 4) apply for a waiver from FHA. I don’t deal with the waivers, which is left for the lender to do. It is my understanding that the waivers are tedious to obtain and not guaranteed.

Potential Seller:I hear the market is crazy! How long do you think it will last?

Jack: Here in New Hampshire, we have a very season driven market. Even when prices remain level from year to year, prices vary from season to season. Winter and holiday cause a slowdown in the winter and prices tend to bottom out. In the spring, there are more buyers (and more sellers too) and prices rise. Prices rise through early mid-summer then tend of level off through the fall. In the mid/late fall, values begin to drop and “bottom out” around January. The crazy thing about the “spring market” (which extends into summer), is that when it starts, it ignites light a flash fire and when it ends, it stops like a car hit the wall. My guess is that the “fast market” will end shortly (if it hasn’t already) and we transition to stability and then to declining. Again, all seasonally.

Listing Broker: I am listing a 2,400 SF contemporary style. Do contemporary houses sell the same as colonials or other traditional two-story houses?

Jack: It really depends on the market. There is an appraisal an economic term called “conformity”. In laments term, to maximize the value of house it should “conform” to the neighborhood. Take a look at new construction? What are they building which represents what today’s buyer are seeking? If they are building all colonial style houses than the contemporary will most likely have less demand. Towns that have a strong preference for colonials (Bedford and Hollis come to mind), will discount the value of contemporary houses. Towns with a mix of different styles may not discount the style as much (if any). Note: The broker indicated the property was located in one of the two towns mentioned and I told him that it was a strong possibility that a contemporary house would sell than similar sized, quality and conditioned colonial style houses.

Pool Owner: Do inground pools add value?

Jack: Unlike many of my colleagues, I do believe than pools add significant value to the some houses. Emphasis on SOME! Whether or not it contributes value and how much depends on the neighborhood, the features/characteristics of the house in general as well as the quality of the pool and its amenities (fencing, decking etc.). Another factor is how the house is designed. If it is set up for entertaining, than a pool may be natural fit. One “trick” I use to measure demand of pools is by looking at aerial photos. If you looks at the 20-30 houses closest to the subject and see that there are hardly any pools, then the market is probably showing you that the pool has little value. Conversely, if you see that 20+ percent of the houses have pools then it would support more value for the pool. 35+ percent would be mean more value. As for how much value, in nearly all cases, the resale contributory value of the pool is much less than cost of installation including amenities. I can’t tell you exactly how much your pool is worth, but I here are two examples of recent houses I appraised that had pools;

1,300 SF Ranch in Manchester: The pool was a modest 16×32 vinyl lined pool approximately 10 years old. It has a modest chain link fence and minimal concrete decking around it. The condition was good. The aerial photos showed only two inground pools in radius of 75 +/- houses. My conclusion was that while the “replacement cost” of that pool would be $30,000+, its contributory value to THAT house and neighborhood was anywhere from Zero to $5,000.

3,300 SF, Colonial in Londonderry: The house was a nice quality house and the pool area was well landscaped. The layout of the house was conducive to entertaining and outdoor enjoyment. The value range of the homes were $300 to $500K. The pool most likely would cost $40,000+ to rebuild. My conclusion was that it added $10,000 to $15,000 in value.

Note: Many appraisers and brokers have relied on the “Pools don’t add value because it’s a short season and not everyone wants a pool” and therefore bank underwriters have taken this as gospel. When I completed my recent appraisal that gave $12,500 for the pool, the underwriter said the adjustment as “excessive”. After I provided my data (paired and grouped data analysis, as well as “Probability of use method”, she backed off and accepted my adjustment.

Jack Lavoie is an SRA designated appraiser and New Hampshire real estate expert. He can be reached at 603-644-1000 or email at jacklavoie@comcast.net